Valeant Pharmaceuticals counterbids Endo, offers Salix $1.45B

Wednesday, March 18, 2015

Valeant Pharmaceuticals International and Salix Pharmaceuticals have entered into an amendment to their Agreement and Plan of Merger, dated Feb. 20. Valeant increased the offer price to acquire all the outstanding common stock of Salix from $158 per share to $199 per share, for aggregate gross proceeds of approximately $1.45 billion.

If the minimum tender condition is satisfied at the end of the day on March 31, Valeant expects to close the transaction on April 1. If all of the conditions to the tender offer have not been satisfied by April 8, the offer price will drop back to $158 per share. In consideration for the increase of the offer price through April 7, the termination fee payable by Salix to Valeant has been increased by $100 million and the outside date after which either party may terminate the transaction has been moved from Aug. 20, to May 1. The amendment was approved by the boards of directors of both companies.

The action comes after Endo International confirmed it is withdrawing its cash and stock proposal to acquire Salix, ending what had become a bidding war for the company. Endo said it is moving forward with its growth strategies and active pipeline of acquisition targets across its three core platforms – U.S. branded pharmaceuticals, U.S. generic pharmaceuticals and international pharmaceuticals.

“While we are disappointed with this outcome, we have been and will continue to be disciplined in our approach to potential acquisitions. We would like to wish Salix and Valeant continued success as they move forward with their transaction,” Endo said in a statement.

“We continue to be very excited about the combination of our two companies and we are committed to getting this deal done,” said J. Michael Pearson, chairman and CEO of Valeant. “This revised offer provides Salix shareholders with all-cash at a significant premium and the certainty to close by April 1. By offering a significant premium with a 100% cash offer, eliminating market and company equity risk that could arise from other non-cash offers with a four-plus month closing timeline instead of a closing by April 1, our new arrangement creates significant shareholder value for Salix. In addition, the transaction remains modestly accretive in 2015 and will be more than 20% accretive in 2016.”

Valeant expects to use the net proceeds, together with borrowings under the company’s incremental term loan facilities, the proceeds of an offering of Valeant’s senior notes and cash on hand, to fund the purchase price of the previously announced acquisition of Salix Pharmaceuticals, as well as repayments of indebtedness of Salix and certain transaction expenses. The company intends to use any remaining proceeds for general corporate purposes, including acquisitions and debt repayments.

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